Dividend Funds

There are more dividend funds available for investors in recent years. Dividends are becoming an increasing popular measure for investment performance. Here is a list of dividend funds I can find from various sources. I will update this list when I seek out more information over time.

iShares Dow Jones Select Dividend Index Fund - DVY
Inception: 11/3/2003
Net Assets: $6,257,704,000

The iShares Dow Jones Select Dividend Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones Select Dividend Index (the "Index"). The Index is comprised of one hundred of the highest dividend-yielding securities (excluding REITs) in the Dow Jones U.S. Total Market Index, a broad-based index representative of the total market for U.S. equity securities.

PowerShares High Yield Equity Dividend Achievers Portfolio (PEY)
Inception: 12/9/2004
Net Assets: $459,690,000

PowerShares High Yield Equity Dividend Achievers Portfolio seeks investment results that, before expenses, generally correspond to the price and yield performance of the Mergent Dividend Achievers 50 Index. The Index is comprised of the 50 highest-yielding companies with at least 10 years of consecutive dividend increases. There is no assurance that the price and yield performance of the benchmark index for the fund can be fully matched.

PowerShares International Dividend Achiever Portfolio (PID)
Inception: 9/15/2005
Net Assets: $170,843,000

The fund seeks investment results that correspond to the price and yield of an equity index called the broad Dividend Achievers Index. The Fund may invest 90% of its total assets in dividend paying non US common stocks that comprise the Broad Dividend Achievers Index. The stocks are selected principally on the basis of their consecutive years of dividend growth as pursuant to a proprietary selection methodology. The Fund may invest a small portion of the stocks in small and medium capitalization stocks.

PowerShares Dividend Achiever Portfolio (PFM)
Inception: 9/15/2005
Net Assets: $23,449,000

The fund seeks investment results that correspond to the price and yield of an equity index called the broad Dividend Achievers Index. The fund may normally invest 90% of its total assets in dividend paying common stocks that comprise the Broad Dividend Achievers Index.

StreetTRACKS SPDR Dividend (SDY)
Inception: 11/8/2005
Net Assets: $100,263,000

The Fund's investment objective is to replicate as closely as possible before expenses the price and yield of the S&P High Yield Dividend Aristocrats Index (the "Dividend Index"). The Fund uses a passive management strategy designed to track the price and yield performance of the Dividend Index. The Dividend Index is designed to measure the performance of 50 highest dividend yielding S&P Composite 1500 constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 25 years.

First Trust Morningstar Dividend Leaders (FDL)
Inception: 3/15/2006
Net Assets: $30,980,000

The Fund is an exchange-traded that seeks investment results that correspond generally to the price and yield of an equity index called the Morningstar Dividend Leaders Index.

Vanguard Dividend Appreciation Index ETF (VIG)
Inception: 4/21/2006
Net Assets: $40.55 M

The Fund seeks to provide competitive long-term growth of capital and increasing income. The fund's target benchmark is the Mergent Dividend Achievers Select Index a subset of the Mergent Dividend Achievers Index a market-capitalization weighted index of stocks with a consistent history of increasing dividends. VIG and VDAIX are different classes of the same fund.

Vanguard Dividend Appreciation Index Investor Shares (VDAIX)
Inception: 4/27/2006
Net Assets: $67.74 M

The investment seeks to track the performance of a Mergent Dividend Achievers Select index that measures the investment return of common stocks that have a record of increasing dividends over time. The fund attempts to replicate the target index by investing all, or substantially all, of assets in the stocks that make up the index, holding each stock in approximately the same proportion as weighting in the index. VIG and VDAIX are different classes of the same fund.

WisdomTree Dividend Funds
Inception Date: 6/16/2006

WisdomTree Investments, Inc. and its subsidiary develop domestic and international stock indexes that serve as the basis for exchange traded funds (ETFs) issued by the WisdomTree Trust, institutional funds, and other financial products sponsored by the company. Its subsidiary, WisdomTree Asset Management, Inc., is registered as an investment adviser with the Securities and Exchange Commission and is the investment adviser to the WisdomTree Trust, a family of 20 fundamentally weighted ETFs based on proprietary dividend-weighted indexes. The company was incorporated in 1985 and is based in New York City. This fund manager issued 20 exchanged traded funds related to dividends. These funds are listed here.

WisdomTree Total Dividend Fund (DTD)
WisdomTree High - Yielding Equity Fund (DHS)
WisdomTree Dividend Top 100 Fund (DTN)
WisdomTree Large Cap Dividend Fund (DLN)
WisdomTree Mid-Cap Dividend Fund (DON)
WisdomTree Small Cap Dividend Fund (DES)

WisdomTree DIEFA Fund (DWM)
WisdomTree DIEFA High-Yielding Equity Fund (DTH)

WisdomTree International Dividend Top 100 Fund (DOO)
WisdomTree International Large Cap Dividend Fund (DOL)
WisdomTree International Mid-Cap Dividend Fund (DIM)
WisdomTree International Small Cap Dividend Fund (DLS)

WisdomTree Pacific ex-Japan High-Yielding Equity Fund (DNH)
WisdomTree Pacific ex-Japan Total Dividend Fund (DND)

WisdomTree Japan High - Yielding Equity Fund (DNL)
WisdomTree Japan Small Cap Dividend Fund (DFJ)
WisdomTree Japan Total Dividend Fund (DXJ)

WisdomTree Europe High - Yielding Equity Fund (DEW)
WisdomTree Europe Small Cap Dividend Fund (DFE)
WisdomTree Europe Total Dividend Fund (DEB)

Claymore/Zacks Yield Hog ETF (CVY)
Inception: 09/21/06
Net Assets: $5 million

Claymore/Zacks Yield Hog ETF is an exchange-traded fund which employs a passive management investment approach designed to replicate, before expenses, the performance of the Zacks Yield Hog Index. There is no assurance that the price and yield performance of the Index can be fully matched.

The innovative Zacks Yield Hog Index is the highest yielding domestic index to date. Additionally, it is the first yield-oriented index to combine equities, preferred stocks, REITs, master limited partnerships, ADRs, and closed-end funds.

The objective of The Zacks Yield Hog Index(TM) is to select a diversified group of securities with the potential to outperform, on a risk adjusted basis, the Dow Jones US Select Dividend Index and other benchmark indices. Designed to identify companies with potentially high income and superior risk-return profiles, the index is adjusted quarterly or as required to assure timely stock selection. The index's constituent methodology utilizes multi-factor, proprietary selection rules to identify those securities that offer the greatest potential from a yield risk/return perspective, while maintaining global/industry diversification. The index is comprised of 125 to 150 of the highest ranking securities, chosen and weighted based on a rules based quantitative ranking methodology proprietary to Zacks. The Zacks Yield Hog Index(TM) is published by the American Stock Exchange under the ticker symbol ZAXYH.

Vanguard High Dividend Yield ETF & Fund (VYM & VHDYX)
Inception: 11/16/06
Net Assets: $5 million

FTSE and Vanguard have co-developed a FTSE High Dividend Yield Index. The new custom index consists of stocks traded in the U.S. stock exchanges. Real estate investment trusts (REITs) are removed from the index. Stocks that have not paid a dividend during the previous 12 months are also removed from the index. The remaining stocks are ranked by annual dividend yield and included in the target index until the cumulative market capitalization reaches 50% of the total market cap of this universe of stocks.

Like many other Vanguard funds, this fund has two classes with slightly different management fees (0.25% versus 0.40%).

Buy Low & Sell High Experiment

Buy Low & Sell High Experiment 52-Week Lows

There is one fundamental principle in stock investment – buy low and sell high. So far I have only learned about the volatility part of the game.

In hydraulic engineering, I have learned that there are two ways to generate energy. One is to use tidal waves and another is to generate hydropower using dams.

In the 1990s, I achieved some gains using the knowledge from water systems. I mapped the Internet systems to the water systems. It worked perfectly. Now it is time to practice the hydropower game in investing again.

First let’s review the hydrological equations related to hydropower.

P = e g Q H

Where e is the hydropower plant efficiency, g is gravitational acceleration, Q is the flow passing the hydropower plant, and H is the effective water head in the reservoir.

In this equation, the balance of Q and H should be optimized in order to achieve the maximum hydropower output. If the Q is too big, then H is lost to fast. If Q is too small, then H is maximized, but a portion of the flow would be released from the spillway without passing through the hydropower plant.

In investment, I have the same problem. At one side, I can achieve capital gains by waging the maximum investment amount. At another side, I can achieve capital gains by waiting for the maximum price movement. However, the optimal capital gains are achieved by balancing the investment amount and the price movement. So the same equation used for estimating hydropower can be applied to money management.

P = e g Q H

Where P is the profit, e is the tax efficiency, g is the probability of winning, Q is the number of shares bought in one investment, and H is the price movement.

One way to create the investment situation the above equation can be applied is to look for the 52-week lows of the market. When the stock price is at its 52-week low, there is an excellent probability for the stock price to reverse itself in the next 52-weeks to reach its 52-week high. Between the 52-week high and low, there is a great potential for price movement to be positive.

However, there are a lot of examples working against the above assumptions. The stock price can continue to move down after it reaches the 52-week low. The prices of many companies go all the way to zero and into bankruptcies.

One way to mitigate the zero price movement is to use mutual funds. ETF is one of the greatest potentials. I am going to practice this methodology with the following rules.

First I have to be very carefully in selecting funds among the 52-week lows. I should select only the funds which have the potential to reach its 52-week high in the coming 52 weeks. The selected fund price must be lower than 80% of its 52-week high. This is to guarantee the 25% potential gains. For the first investment, the amount should be enough to sell three times or 6k. This is to guarantee the average 10% capital gain for the selected fund. I will use the 5% rule to add new or reduce investment, which is to add or sell 2k at 5% intervals. I will not add new fund until the first fund is completely sold out or until the fund become a permanent fund of 40k. With one million dollars, one can establish a portfolio with 25 such funds

Now I have to estimate the potential capital need. If there is a 50% probability of winning 11.11% (10/9) each time, then the Kelly fraction is 5%. That is 20 times the original investment of 6k, or 120k. So the potential capital need for this experiment is 40k to 120k for each new fund.

Now I will commit 100k for this experiment. I will call this experiment as Experiment 52 Week Lows. There are three major sources for obtaining the 52-week lows data: Bar Chart, NASDAQ, and MSN Money Central. The Bar Chart list is usually the most complete list.

Kelly Criterion

The first time I heard about Kelly Criterion was many years ago when I was reading a book about horse racing. When I met Max, I started to notice that he talked about Kelly Formula several times. Recently, Youhang talked about Kelly Criterion related to the investment size. After checking Wikipedia, I learned more about Kelly Criterion.

K = P – Q / B

K – Fraction of current bankroll to wager
B – Odds received on the wager (winning ratio)
P – Probability of winning
Q – Probability of loosing = 1 – P

For example, if the winning ratio is 10/9 (11.11%), which is the average annual return for the stock market index; P and Q are 1/2 (50%). Using the above formula we can calculate the Kelly fraction as 5%.

K = 0.5 – 0.5 / (10/9) = 0.05 = 5%

For another example, if the winning ratio is 100/94 (6.38%), which is the average annual return for the bond market index; P and Q are 1/2 (50%). Using the above formula we can calculate the Kelly fraction as 3%.

K = 0.5 – 0.5 / (100/94) = 0.03 = 3%

I am not very sure about the correctness of using the Kelly Formula. If the above calculations are correct, then one should at least invest 20 independent stocks and 30 independent bonds in order to meet the Kelly Criterion.

TIPS Funds

TIPS (Treasury Inflation Protected Securities) are becoming an increasingly critical investment vehicle due to the fact that potential inflation still exists. Major institutions over the last decade have developed many mutual funds to satisfy the investment needs. So there are several choices for investors to choose from.

TIPS have many names: inflation protected securities, inflation adjusted securities, and inflation indexed securities. Basically, the interest rate of TIPS is determined by two components: inflation rate and margin rate. For example, if inflation rate is 3% and the margin rate is 2%, then the TIPS yield is 5%. Usually, the margin rate is fixed while the inflation rate is changing over the life of the bond.

Although the fund comprises securities guaranteed by the U.S. Government for the prompt payment of principal and interest at maturity, the fund itself is not guaranteed by the U.S. Government.

The following TIPS funds (ETF, closed-end & open-end mutual funds) are the investment universe I can find from various sources for now. They are listed here according to their inception dates.

BBH Real Return N (BBHIX)
Inception Date: 7/23/1992
Total Net Assets: $388.87 Mil

This is a no-load mutual fund. The investment seeks current income consistent with minimal price fluctuations in net asset value and maintenance of liquidity. The fund normally invests at least 80% of its net assets plus borrowings for investment purposes in securities that are structured to provide protection against inflation. Such securities are commonly referred to as Inflation-Indexed Securities.

American Century Inflation-Adjusted Bond Fund Investor Class (ACITX)
Inception Date: 10/2/1997
Total Net Assets: $649,405,339

This is a no-load mutual fund. The fund seeks to provide total return and inflation protection consistent with investment in inflation-indexed securities.

The fund invests at least 80% of its assets in inflation-adjusted debt securities. These securities include inflation-indexed securities issued by the U.S. Treasury, by other U.S. government agencies and instrumentalities, and by other, non-U.S. government entities such as corpora­tions. Inflation-indexed securities are designed to protect the future purchasing power of the money invested in them; their principal value may be indexed for changes in inflation.

The fund may invest up to 20% of its assets in traditional U.S. Treasury, U.S. government agency or other non-U.S. government securities that are not inflation-indexed.

The fund also may invest in derivative instruments such as options, futures contracts, options on futures contracts, and swap agreements (including, but not limited to, credit default swap agreements), or in mortgage- or asset-backed securities, provided that such investments are in keeping with the fund’s investment objective.

The fund may purchase securities in a number of different ways to seek higher rates of return. For example, by using when-issued and forward commitment transactions, the fund may purchase securities in advance to generate additional income.

Vanguard Inflation-Protected Securities (VIPSX)
Inception Date: 6/29/2000
Total Net Assets: $6,332.30 Million

This is a no-load mutual fund. The investment seeks to provide inflation protection and income consistent with investment in inflation-indexed securities. The fund invests at least 80% of assets in inflation-indexed bonds issued by the U.S. government. It may invest in bonds of any maturity, though the fund typically maintains a dollar-weighted average maturity of seven to 20 years. The fund currently offers no load, Institutional, and Admiral Shares, all of which differ in fee structure and availability.

Fidelity Inflation-Protected Bond Fund (FINPX)
Inception Date: 6/26/2002
Total Net Assets: $1,436.34 Million

This is a no-load mutual fund. Normally invests at least 80% of assets in inflation-protected debt securities of all types. Currently focusing investments in inflation-protected debt securities issued by the U.S. Treasury, but may also invest in inflation-protected debt securities issued by U.S. Government agencies and instrumentalities other than the U.S. Treasury, and by other entities such as corporations and foreign governments.

Western Asset/Claymore US Treasury Inflation Protection Securities (WIA)
Inception Date: 9/26/2003
Total Net Assets: $393,708,000
Total Common Assets: $205,000,000

This is a closed-end fund. Its investment objective is to provide current income and capital appreciation. Under normal market conditions, the Fund will invest at least 80% of its total managed assets in U.S. Treasury Inflation Protected Securities (US TIPS). U.S. TIPS are fixed income securities issued by the U.S. Department of the Treasury, the principal amounts of which are adjusted daily based upon changes in the rate of inflation (currently represented by the non-seasonally adjusted Consumer Price Index for All Urban Consumers). The Fund may also invest up to 20% of its total managed assets in corporate bonds or other securities and instruments. The Fund intends to limit its investments to U.S. dollar-denominated securities and instruments, and will not invest in bonds that are below investment grade quality at the time of purchase.

iShares Lehman TIPS Bond Fund (TIP)
Inception Date: 12/4/2003
Total Net Assets: $4.22 Billion

This is an ETF. The investment seeks results that correspond generally to the price and yield performance of the inflation-protected sector of the United States Treasury market as defined by the Lehman Brothers U.S. TIPS index. The fund will normally invest at least 95% of assets in U.S. government bonds. It may also invest in bonds not included in the underlying index, cash, liquid short-term instruments, shares of money market funds, and securities not included in the index.

Western Asset/Claymore US Treasury Inflation Protection Securities 2 (WIW)
Inception Date: 2/27/2004
Total Net Assets: $1,252,595,000
Total Common Assets: $823,471,000

This is a closed-end fund. The Fund's primary investment objective is to provide current income. Capital appreciation, when consistent with current income, is a secondary investment objective. Under normal market conditions, the Fund will invest at least 80% of its total managed assets in U.S. Treasury Inflation Protected Securities.

Salomon Brothers Inflation Management Fund (IMF)
Inception Date: 5/26/2004
Total Net Assets: $262,007,000
Total Common Assets: $170,071,000

This is a closed-end fund. The Fund's primary investment objective is total return. The Fund's secondary investment objective is current income. Under normal market conditions, the Fund will invest at least 80% of its Managed Assets in inflation-protected securities issued by U.S. and non-U.S. governments, their agencies or instrumentalities and corporations that are structured to provide protection against inflation, and certain other fixed income securities that the Investment Manager believes will provide protection against inflation.

Fidelity Strategic Real Return Fund (FSRRX)
Inception Date: 9/7/2005
Total Net Assets: $2.53B

This is a no-load mutual fund. The investment seeks real return consistent with investment risk. The fund intends to use a neutral mix of approximately 30% inflation-protected debt securities, 25% floating-rate loans, 25% commodity-linked notes and related investments, and 20% REITS and other real estate related investments to achieve real return.

Natural Resource Funds

Natural resources are becoming an increasingly critical investment vehicle due to the global expansion of economic activities. Major institutions over the last century have developed many mutual funds to satisfy the investment needs. So there are many choices for investors to choose from.

Natural resources in general include all materials used for economic activities. These may include energy sources such as oil and coal, industrial materials such as copper and aluminum, precious metals such as gold, forest resource like timber, and land. Natural resource is one of the production factors (land, capital, labor, and entrepreneurship).

The following natural resources funds (ETF, closed-end & open-end mutual funds) are the investment universe I can find from various sources for now. They are listed here according to their inception dates.

Petroleum & Resources Corporation (PEO)
Inception Date: 1/30/1929
Total Net Assets: $824,479,000

This is one of the oldest funds in the investment universe. Petroleum and Resources Corporation is a closed-end investment company. The objectives of Petroleum Corporation are preservation of capital, the attainment of a reasonable and dependable income from investments and an opportunity for capital appreciation consistent with the above. It is the policy of the corporation to concentrate its investment portfolio in securities in the petroleum and energy-related industries. The fund may invest up to 20% of assets outside of the energy sector. The Fund may leverage itself through the issuance of preferred stock.

ASA Limited (ASA)
Inception Date: 9/1/1958
Total Net Assets: $673,573,000

This is closed-end fund. ASA (Bermuda) provides investors a vehicle to invest in a portfolio consisting primarily of the stocks of companies engaged in the exploration mining or processing of gold silver platinum diamonds or other precious minerals. It may also invest in gold silver and platinum bullion or securities that seek to replicate the price movement of gold silver or platinum bullion.

Fidelity Select Energy Portfolio (FSENX)
Inception Date: 07/14/1981
Total Net Assets: $2,756.86 Million

This is a no-load mutual fund. Normally invests primarily in common stocks and normally invests at least 80% of assets in securities of companies principally engaged in the energy field, including the conventional areas of oil, gas, electricity, and coal, and newer sources of energy such as nuclear, geothermal, oil shale, and solar power.

US Global Resources Fund (PSPFX)
Inception Date: 7/28/1983
Total Net Assets: $787.1 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks long-term growth of capital plus protection against inflation and monetary instability. The fund normally invests at least 80% of its sector assets in the equity securities of companies within the natural resource sector. It may invest without limitation in the various industries of the natural resource sector, such as oil, gas, and basic materials. This fund is non-diversified. The fund charges a short-term trading fee and a $10 account closeout fee.

AIM Gold Investor Class (FGLDX)
Inception Date: 1/19/1984
Total Net Assets: $124.4 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks long-term capital growth. The fund normally invests at least 80% of net assets in equity securities of companies which involved in exploring for, mining, processing, or dealing and investing in gold, gold bullion, and other precious metals such as silver, platinum, and palladium, as well as diamonds. It may also invest up to 100% of total assets in securities of non-U.S. issuers. The fund currently offers A, B, C and Investor classes, all of which differ in fee structure and availability. The fund past name is INVESCO Gold & Precious Metals Fund.

AIM Energy Investor Class (FSTEX)
Inception Date: 8/19/1984
Total Net Assets: $523.5 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks capital growth. The fund normally invests at least 80% of net assets in the equity securities of companies in energy-related industries. Companies in these industries include oil and gas exploration companies, natural gas pipeline companies, refinery companies, energy conservation companies, coal, alternative energy companies, and innovative energy technology companies. It may invest up to 25% of assets in securities of non-U.S. issuers. The fund currently offers A, B, C, K and Investor shares, all of which differ in fee structure and availability. The fund past name is INVESCO Energy Fund.

Fidelity Select Energy Service Portfolio (FSESX)
Inception Date: 12/16/1985
Total Net Assets: $1,704.54 Million

This is a no-load mutual fund. Normally invests primarily in common stocks and normally invests at least 80% of assets in securities of companies principally engaged in the energy service field, including those that provide services and equipment to the conventional areas of oil, gas, electricity, and coal, and newer sources of energy such as nuclear, geothermal, oil shale, and solar power.

Fidelity Select Gold Portfolio (FSAGX)
Inception Date: 12/16/1985
Total Net Assets: $1,548.59 Million

This is a no-load mutual fund. Normally invests primarily in common stocks and in certain precious metals. Invests primarily in companies engaged in exploration, mining, processing, or dealing in gold, or to a lesser degree, in silver, platinum, diamonds, or other precious metals and minerals and normally invests at least 80% of assets in securities of companies principally engaged in gold-related activities, and in gold bullion or coins. Invests in other precious metals, instruments whose value is linked to the price of precious metals, and securities of companies that manufacture and distribute precious metal and mineral products (such as jewelry, watches, and metal foil and leaf) and companies that invest in other companies engaged in gold and other precious metal and mineral-related activities.

US World Precious Minerals (UNWPX)
Inception Date: 11/29/1985
Total Net Assets: $360.9 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks long-term growth of capital plus protection against inflation and monetary instability. The fund invests normally at least 80% of its net assets(plus any borrowings for investment purposes) in equity securities of companies principally engaged in the exploration for, mining and processing of precious minerals such as gold, silver, platinum, and diamonds. It focuses on selecting junior and intermediate exploration companies from around the world. This fund is non-diversified. The fund charges a short-term trading fee and a $10 account closeout fee.

Bull & Bear Midas Fund (MIDSX)
Inception Date: 1/8/1986
Total Net Assets: $58.1 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks capital appreciation and protection against inflation; current income is secondary. The fund invests at least 65% of assets in securities of companies primarily involved in mining, processing, fabricating, distributing or otherwise dealing in gold, silver, platinum or other natural resources. It may invest up to 35% of assets in securities of companies that derive a portion of their gross revenues from the businesses mentioned above, in securities of selected growth companies and fixed income securities. The fund also invests in domestic or foreign companies. It is non-diversified.

Fidelity Select Paper and Forest Products Portfolio (FSPFX)
Inception Date: 6/30/1986
Total Net Assets: $21.5 Million

This is a no-load mutual fund. Normally invests primarily in common stocks and normally invests at least 80% of assets in securities of companies principally engaged in the manufacture, research, sale, or distribution of paper products, packaging products, building materials, and other products related to the paper and forest products industry.

Fidelity Select Industrial Materials Portfolio (FSDPX)
Inception Date: 9/29/1986
Total Net Assets: $211.32 Million

This is a no-load mutual fund. Normally invests primarily in common stocks and normally invests at least 80% of assets in securities of companies principally engaged in the manufacture, mining, processing, or distribution of raw materials and intermediate goods used in the industrial sector.

American Cent Global Gold Investor Class (BGEIX)
Inception Date: 8/17/1988
Total Net Assets: $776.6 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks capital appreciation and current income. The fund invests 80% of assets in securities of Gold Companies engaged in mining, processing, exploring for or otherwise dealing with other precious metals. It is non-diversified. The fund currently offers Investor and Advisor classes.

Excelsior Energy and Natural Resources (UMESX)
Inception Date: 12/31/1992
Total Net Assets: $444.9 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks long-term capital appreciation. The fund normal invests at least 80% of net assets in equity securities of U.S. and foreign companies engaged in the energy and natural resources industries. These companies include those engaged in the discovery, development, production or distribution of energy or other natural resources and companies that develop technologies and furnish energy and natural resource supplies and services to these companies.

Fidelity Select Natural Gas Portfolio (FSNGX)
Inception Date: 4/21/1993
Total Net Assets: $1,391.49 Million

This is a no-load mutual fund. Normally invests primarily in common stocks and normally invests at least 80% of assets in securities of companies principally engaged in the production, transmission, and distribution of natural gas, and involved in the exploration of potential natural gas sources, as well as those companies that provide services and equipment to natural gas producers, refineries, cogeneration facilities, converters, and distributors.

Rydex Precious Metals Investor Class (RYPMX)
Inception Date: 12/1/1993
Total Net Assets: $195.4 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks capital appreciation. The fund invests primarily in securities of metals-related issuers. It may invest in other securities that management expects to perform in a manner that would assist the funds performance to closely track the XAU index. The fund may also invest in securities of foreign issuers. It is non-diversified. The fund has Advisor, Investor, A, and C share classes, all of which differ in availability and fee structure.

GAMCO Gold Class AAA (GOLDX)
Inception Date: 7/11/1994
Total Net Assets: $334 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks long-term capital appreciation. The fund typically invests at least 80% of net assets in equity securities of companies principally engaged in gold-related activities. These may include exploration, mining, fabrication, processing, distribution, or trading of gold, as well as financing, managing, controlling, or operating gold companies. A substantial portion of the funds assets may be invested in foreign securities issued in both developed and emerging markets. The fund may invest up to 30% of assets in gold bullion and other precious metals. This class offers classes Gabelli Gold and A, B and C shares, each with its own fees, load structure and availability. The fund past name is Gabelli Gold Fund.

RS Global Natural Resources Fund (RSNRX)
Inception Date: 11/15/1995
Total Net Assets: $1,712.7 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks long-term capital appreciation. The fund invests principally in equity securities. It normally invests at least 80% of assets in securities of companies which are principally engaged in natural resources industries. The fund may at times invest a portion of assets in debt securities and other income-producing securities.

Fidelity Select Natural Resources Portfolio (FNARX)
Inception Date: 3/3/1997
Total Net Assets: $1,190.73 Million

This is a no-load mutual fund. Normally invests primarily in common stocks and normally invests at least 80% of assets in securities of companies principally engaged in owning or developing natural resources, or supplying goods and services to such companies, and in precious metals.

ICON Materials Fund (ICENX)
Inception Date: 5/6/1997
Total Net Assets: $132.1 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks long-term capital appreciation. The fund normally invests at least 80% of the net assets in equities of companies in the Materials sector and traded in the U.S. It may invest in common and preferred stocks of companies of any market capitalization. The fund is non-diversified. The fund is offered to certain qualified investors.

ICON Energy Fund (ICENX)
Inception Date: 11/5/1997
Total Net Assets: $892.9 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks long-term capital appreciation. The fund normally invests at least 80% of the net assets in equities of companies in the Energy sector and traded in the U.S. It may invest in common and preferred stocks of companies of any market capitalization. The fund is non-diversified.

Rydex Basic Materials Investor Class (RYBIX)
Inception Date: 4/1/1998
Total Net Assets: $26 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks capital appreciation. The fund primarily invests in equity securities issued by basic materials companies that are traded in the United States. It may also engage in futures and options transactions, and purchase ADRS and U.S. Government securities. The fund is non-diversified. The fund offers Investor, Advisor, A, and C share classes, all of which differ in fee structure and availability.

Rydex Energy Services Investor Class (RYVIX)
Inception Date: 4/1/1998
Total Net Assets: $152.5 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks capital appreciation. The fund primarily invests in equity securities issued by energy services companies that are traded in the United States, as well as in futures and options contracts. Energy services companies are engaged in one or more businesses in the energy service field. It may invest any remaining assets in ADRS, enter into repurchase agreements, and purchase money-market instruments. The fund is non-diversified. The fund offers Investor, Advisor, A and C share classes, all of which differ in fee structure and availability.

Rydex Energy Investor Class (RYEIX)
Inception Date: 4/21/1998
Total Net Assets: $129.7 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks capital appreciation. The fund primarily invests in equity securities, including common stocks, preferred, warrants, rights, and convertibles, of domestic energy companies, as well as in futures and options contracts. Energy companies are involved in all aspects of the industry; including oil, gas, and electricity, coal, as well as nuclear, geothermal, oil shale, and solar power. It may invest in companies that produce, transmit, market, distribute or measure energy. The fund is non-diversified. The fund offers A, C, Advisor, and Investor class shares, all of which differ in fee structure and availability.

SPDR Materials (XLB)
Inception Date: 12/14/1998
Total Net Assets: $984,994,000

This is an ETF. The fund invests in industries such as chemicals, construction materials, containers and packaging, metals and mining, and paper and forest products.

SPDR Energy (XLE)
Inception Date: 12/14/1998
Total Net Assets: $4,307,309,000

This is an ETF. The fund invests in energy companies that primarily develop and produce crude oil and natural gas, and provide drilling and other energy-related services.

iShares Dow Jones U.S. Basic Materials Sector Index Fund (IYM)
Inception Date: 6/12/2000
Total Net Assets: $502,815,000

This is an ETF. The Dow Jones U.S Basic Materials Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S Basic Materials Sector Index. The index measures the performance of the basic materials economic sector of the U.S equity market. The Fund uses a Representative Sampling strategy to try to track the index. Components companies are involved in the production of aluminum, chemicals, commodities, chemicals specialty products, forest products, non-ferrous mining products, paper products, precious metals and steel.

iShares Dow Jones U.S. Energy Sector Index Fund (IYE)
Inception Date: 6/12/2000
Total Net Assets: $954,697,000

This is an ETF. The Dow Jones Energy Sector Index Fund seek investment result that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S Energy Sector Index. The Index measures the performance of the energy sector of the U.S equity market. As of March 31, 2000, The index consisted of 88 stocks. Its three largest stocks were Exxon Mobil Corporation, Chevron Corporation and Schlumberger Limited. The fund will concentrate its investment in a particular industry or group of industries to approximately the same extend the index is concentrated.

HOLDRS Oil Services Trust (OIH)
Inception Date: 2/6/2001
Total Net Assets: $932,990,000

The Oil Service HOLDRS Trust is intended to hold deposited shares for the benefit of owners of Oil Services HOLDRS. The trustee will perform only administrative and ministerial acts. The property of the fund will consist of the underlying securities and all monies or other property, if any, received by the trustee. The trust will terminate on December 31, 2041, or earlier if a termination event occurs. The trust will issue Oil Services HOLDRS under the depositary trust agreement. After the initial offering, the trust may issue additional Oil Service HOLDRS on a continuous basis when an investor deposits the requisite underlying securities with the trustee.

Since the HOLDRS trust holds a fix number of components, the trust can only last as long as its components can survive. This characteristic differentiates it from other closed-end funds or ETF. I personally dislike this kind of trust due to this characteristic. I would rather invest in similar product in ETF or CEF format.

iShares Goldman Sachs Natural Resources Index Fund (IGE)
Inception Date: 10/22/2001
Total Net Assets: $1,315,602,000

This is an ETF. The iShares Goldman Sachs Natural Resources Index Fund seeks investment results that correspond to the performance of U.S.-traded natural resource related stocks as represented by the Goldman Sachs Natural Resources Index. The Index includes companies in the following categories: extractive industries, energy companies, owners and operators of timber tracts, forestry services, producers of pulp and paper, and owners of plantations.

iShares S&P Global Energy Sector Index Fund (IXC)
Inception Date: 11/12/2001
Total Net Assets: $685,415,000

This is an ETF. The iShares S&P Global Energy Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P Global Energy Sector Index. Component companies include oil equipment and services, oil exploration and production, and oil refineries.

Vanguard Materials ETF (VAW)
Inception Date: 1/26/2004
Total Net Assets: $68,846,000

This is an ETF. The fund seeks to track the performance of the MSCI US Investable Market Materials Index, an index of stocks of large, medium-size, and small U.S. companies within the materials sector. The sector is made up of companies in a wide range of commodity related manufacturing industries. Included within this sector are companies that manufacture chemicals, construction materials, glass, paper, forest products, and related packaging products, as well as metals, minerals and mining companies, including producers of steel.

Guinness Atkinson Global Energy (GAGEX)
Inception Date: 6/30/2004
Total Net Assets: $99.2 Million

This is a no-load mutual fund which can be bought at Fidelity Investment. The investment seeks long-term capital appreciation. The fund normally invests at least 80% of assets in equity securities of both U.S. and non-U.S. companies principally engaged in the production, exploration or discovery, or distribution of energy including the research and development or production of alternative energy sources. It invests in approximately 20 to 35 stocks and does not engage in market timing. The fund is non-diversified.

Vanguard Energy ETF (VDE)
Inception Date: 9/23/2004
Total Net Assets: $277,519,000

This is an ETF. The fund seeks to track the performance of the Morgan Stanley Capital International« (MSCI«) US Investable Market Energy Index an index of stocks of large- medium-size and small U.S. companies in the energy sector as classified under the Global Industry Classification Standard (GICS). This GICS sector is made up of companies whose businesses are dominated by either of the following activities: the construction or provision of oil rigs drilling equipment and other energy-related service and equipment (such as seismic data collection); or companies engaged in the exploration production marketing refining and/or transportation of oil and gas products.

DWS Global Commodities Stock Fund (GCS)
Inception Date: 9/24/2004
Total Net Assets: $441,680,000

This is a closed-end mutual fund. The Fund's investment objective is capital appreciation with total return as a secondary objective. Under normal market conditions the Fund will invest substantially all but not less than 80% of its total assets in equity and commodities-linked securities of companies in commodities-related industries or other issuers where the value of the investment is linked to changes in commodity prices or a commodities-related index such as commodities-linked structured notes.

PowerShares Wilder Clean Energy Portfolio (PBW)
Inception Date: 3/3/2005
Total Net Assets: $722,940,000

This is an ETF. The fund is based on the Wilder Hill Clean Energy Index. The fund seeks to deliver capital appreciation. The Index is comprised of companies that focus on greener and generally renewable sources of energy and technologies facilitating cleaner energy.

Gabelli Global Gold and Natural Resources & Income Trust (GGN)
Inception Date: 3/28/2005
Total Net Assets: $416,206,000

This is a closed-end fund. The Fund's primary investment objective is to provide a high level of current income. The Fund's secondary investment objective is to seek capital appreciation consistent with the Fund's strategy and its primary objective. Under normal market conditions the Fund will attempt to achieve its objectives by investing at least 80% of its assets in equity securities of companies principally engaged in the gold industry and the natural resources industries. The Fund will invest at least 25% of its assets in the equity securities of companies principally engaged in the exploration, mining, fabrication, processing, and distribution or trading of gold or the financing managing controlling or operating of companies engaged in "gold-related" activities.

According to the private communications with the fund manager, The Gabelli Global Gold and Natural Resources Income Trust is not an ETF. It is a closed-end fund that uses covered calls to generate income from the volatility of natural resource shares.

PowerShares Dynamic Energy Exploration & Production Portfolio (PXE)
Inception Date: 10/26/2005
Total Net Assets: $111,795,000

This is an ETF. The Fund seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the Dynamic Energy Exploration & Production Intellidex (SM) Index (the "Energy Exploration & Production Intellidex" or "Underlying Intellidex"). In pursuit of its objective the Fund will normally invest at least 90% of its total assets in common stocks that comprise the Energy Exploration & Production Intellidex. The Energy Exploration & Production Intellidex is comprised of stocks of 30 U.S. companies involved in the exploration and production of natural resources used to produce energy. These are companies that are principally engaged in exploration extraction and production of crude oil and natural gas from land-based or offshore wells.

PowerShares Dynamic Oil & Gas Services Portfolio (PXJ)
Inception Date: 10/26/2005
Total Net Assets: $336,132,000

This is an ETF. The Fund seeks investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the Dynamic Oil Services Intellidex (SM) Index (the "Oil Services Intellidex" or "Underlying Intellidex"). The Fund will normally invest at least 80% of its total assets in common stocks of companies that assist in the production processing and distribution of oil and gas. The Oil Services Intellidex is comprised of stocks of 30 U.S. companies that assist in the production processing and distribution of oil and gas. The Oil Services Intellidex may include companies that are engaged in the drilling of oil and gas wells; manufacturing oil and gas field machinery and equipment.

iShares Dow Jones U.S. Oil Equipment & Services (IEZ)
Inception Date: 5/1/2006
Total Net Assets: $33,520,000

This is an ETF. The Fund seeks investment results that correspond generally to the price and yield performance before fees and expenses of the Dow Jones U.S. Select Oil Equipment & Services Index. The Index includes companies that are suppliers of equipment or services to oil fields and offshore platforms such as drilling exploration engineering logistics seismic information services and platform construction.

iShares Dow Jones U.S. Oil & Gas Exploration & Production (IEO)
Inception Date: 5/1/2006
Total Net Assets: $29,698,500

This is an ETF. The Fund seeks investment results that correspond generally to the price and yield performance before fees and expenses of the Dow Jones U.S. Select Oil Exploration & Production Index. The Index includes companies that are engaged in the exploration for and extraction production refining and supply of oil and gas products.

Market Vectors TR Gold Miners (GDX)
Inception Date: 5/22/2006
Total Net Assets: $217,510,920

This is an ETF. The investment objective of the fund is to replicate as closely as possible, before fees and expenses, the price and yield performance of its Index, and the Index only invests in companies with market capitalization greater than $100 million that have traded volume of at least 50,000 shares over the past six months. The Fund will normally invest at least 95% of its total assets in stocks that comprise the Index. The Fund will mainly invest in the gold and silver mining industry.

SPDR Oil & Gas Equipment & Services (XES)
Inception Date: 6/22/2006
Total Net Assets: $20,227,500

This is an ETF. The investment objective of the Fund is to replicate the performance of an index derived from the oil and gas equipment and services segment of a U.S. total market composite index. The Fund uses a passive management strategy designed to track the total return performance of the S&P Oil & Gas Equipment & Services Select Industry Index.

SPDR Oil & Gas Exploration & Production (XOP)
Inception Date: 6/22/2006
Total Net Assets: $10,740,000

This is an ETF. The investment objective of the Fund is to replicate the performance of an index derived from the oil and gas exploration and production segment of a U.S. total market composite index. The Fund uses a passive management strategy designed to track the total return performance of the S&P Oil & Gas Exploration & Production Select Industry Index.

iShares S&P Global Materials Sector Index Fund (MXI)
Inception Date: 9/21/2006
Total Net Assets: $30 Million

This is an ETF. The iShares S&P Global Materials Sector Index Fund seeks investment results that correspond generally to the price and yield performance of the S&P Global Materials Sector Index (the Index). The Index is a subset of the Standard & Poor's Global 1200 Index. Component companies of the Index include companies engaged in a variety of commodity-related manufacturing activities. As of June 30, 2006, the Index comprised stocks of companies in various countries, which included Australia, Belgium, Brazil, Canada, Chile, Finland, France, Germany, Ireland, Japan, Korea, Luxembourg, Mexico, the Netherlands, Portugal, Spain, Sweden, Switzerland, Taiwan, the United Kingdom and the United States.

BlackRock Real Asset Equity Trust (BCF).
Inception Date: 9/27/2006
Total Net Assets: $900 Million

This is a closed-end Fund. The BlackRock Real Asset Equity Trust is an investment solution that will provide exposure to energy-, natural resources- and basic materials-related common stocks. The Trust will seek to benefit from an elongated cycle of higher energy, natural resources and basic materials prices driven by demand and supply fundamentals, including globalization, industrialization of developing countries, growth in China, supply constraints and other factors.

Infrastructure Funds

Infrastructure is a unique investment vehicle in the alternative investment space. Limited financial institutions in the last few years have developed new mutual funds to satisfy the investment needs. Infrastructure funds or companies invest globally in infrastructure assets, including energy, transportation and water. Targets include power generation and transmission, gas storage and pipelines, water assets, airports, air traffic control, ports, railroads and toll roads.

I believe this asset class will become a critical component of sophisticated investment portfolios. Infrastructure funds usually invest in long-life assets such as airports, hydropower plants, expressways, timberland, and other infrastructures.

The following infrastructure funds and companies are the investment universe I can find from various sources for now. The following mutual funds and companies are listed according to their inception dates.

Brookfield Asset Management (BAM)
Inception Date: 12/30/1983
Market Capitalization: $18.82 Billion

Brookfield is an asset manager. Focused on property, power and infrastructure assets, we have over US$50 billion of assets under management. We own interests in a high quality portfolio of approximately 65 premier office properties and over 130 power generating facilities. In addition, we develop master planned communities and provide clients with a comprehensive array of financial and advisory services. Our assets are located in North America, Europe and Brazil. Brookfield is publicly listed on the NYSE and TSX under the symbol BAM. This is included here due to its vast holdings in hydroelectric power facilities.

iShares Dow Jones Transportation Average Index Fund (IYT)
Inception Date: 10/10/2003
Total Net Assets: $293,125,000

This is an ETF. The fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones Transportation Average Index. Component companies include airlines, industrial transportation companies and general industrial services companies.

Macquarie/FT Global Infrastructure/Utility Dividend & Income Fund (MFD)
Inception Date: 3/26/2004
Total Net Assets: $298,861,000
Total Common Assets: $215,861,000

This is a leveraged closed-end mutual fund. The Fund's investment objective is to seek a high level of current return consisting of dividends, interest and other similar income while attempting to preserve capital. The Fund will seek to achieve its investment objective by investing in a non-diversified portfolio of equity, debt, preferred or convertible securities and other instruments that are issued by U.S. and non-U.S. issuers that manage, own and/or operate infrastructure and utility assets in a select group of countries.

Macquarie Infrastructure Company Trust (MIC)
Inception Date: 12/16/2004
Market Capitalization: $877,860,000

Macquarie Infrastructure Company went public on December 16, 2004. Macquarie Infrastructure Company owns, operates and invests in a diversified group of infrastructure businesses, which provide basic, everyday services, in the United States and other developed countries. It provides airport services, airport parking services, district energy services, and toll road services.

Macquarie Global Infrastructure Total Return Fund (MGU)
Inception Date: 8/26/2005
Total Net Assets: $567,157,000
Total Common Assets: $417,157,000

This is a leveraged closed-end mutual fund. The Fund's investment objective is to provide to its common stockholders a high level of total return consisting of dividends and other income and capital appreciation. Under normal market conditions the Fund will invest at least 80% of its Total Assets in equity and equity-like securities and instruments such as common stocks preferred stocks convertible securities and hybrid securities issued by U.S. and non-U.S. issuers that primarily own or operate Infrastructure Assets.

PowerShares Dynamic Building/Construction Portfolio (PKB)
Inception Date: 10/26/2005
Total Net Assets: $25,406,000

This is an ETF. The Fund seeks investment results that correspond generally to the price and yield of an equity index called the Dynamic Building & Construction IntellidexSM Index. In pursuit of its objective the Fund will normally invest at least 90% of its total assets in common stocks that comprise the Building & Construction Intellidex. The Building & Construction Intellidex is comprised of stocks of 30 U.S. building and construction companies. These are companies that are primarily engaged in providing construction and related engineering services for building and remodeling residential properties commercial or industrial buildings or working on large-scale infrastructure projects such as highways, tunnels, bridges, dams, power lines, and airports.

PowerShares Water Resources Portfolio (PHO)
Inception Date: 12/6/2005
Total Net Assets: $991,208,000

This is an ETF. The Fund is based on the Palisades Water Index. The Index seeks to identify a group of companies that focus on the provision of potable water the treatment of water and the technology and service that are directly related to water consumption.

SPDR Homebuilders (XHB)
Inception Date: 2/6/2006
Total Net Assets: $93,912,000

This is an ETF. The Fund seeks to replicate as closely as possible before expenses the performance of an index derived from the homebuilding segment of a U.S. total market composite index. The Fund uses a passive management strategy designed to track the total return performance of the S&P Homebuilders Select Industry Index. The Homebuilders Index represents the homebuilding sub-industry portion of the S&P Total Market Index. The S&P Total Market Index tracks all the U.S. common stocks listed on the NYSE American Stock Exchange and NASDAQ National Market and NASDAQ Small Cap exchanges. The Homebuilders Index is an equal weighted market cap index. The Fund May invest in money market instruments including repurchase agreements in convertible securities and in options and futures contracts.

iShares Dow Jones U.S. Home Construction Index (ITB)
Inception Date: 5/1/2006
Total Net Assets: $40,000,000

This is an ETF. The Fund seeks investment results that correspond generally to the price and yield performance before fees and expenses of the Dow Jones U.S. Select Home Builders Index. The Index includes companies that are constructors of residential homes including manufacturers of mobile and prefabricated homes.

MLP Funds

Master Limited Partnership (MLP) or Publicly Traded Partnership (PTP) is a unique investment vehicle in the alternative investment space. Major institutions in the last few years have developed new mutual funds to satisfy the investment needs.

The Coalition of Publicly Traded Partnerships (http://www.ptpcoalition.org/) is the main sources for information about the partnerships. This coalition will change its name to National Association of Publicly Traded Partnerships (NAPTP). They will develop a new web site (http://www.naptp.org/) to distribute similar information.

I believe this asset class will become as popular as the REIT (Real Estate Investment Trust). Like REIT, PTP has to distribute majority portion of its earnings to investors. So these partnerships can avoid the double tax status of regular corporations. Most of the current partnerships are energy-related.

Another asset class similar to MLP is the Royalty Trust. There are Canadian Royalty Trusts. There are American royalty trusts. However, there is only one fund listed in this article has significant holdings in royalty trusts. I believe Energy Royalty Trust has a unique space in the investment space.

The following MLP funds are the investment universe I can find from various sources for now. This is one of the newest asset classes to be added to sophisticated investment portfolios. The following mutual funds are listed according to their inception dates. Most of the information is extracted from Closed-End Fund Association.

Tortoise Energy Infrastructure Corporation (TYG)
Inception Date: 2/27/2004
Total Net Assets: $667,077,000
Total Common Assets: $432,077,000

This is a leveraged closed-end mutual fund. The Fund's goal is to provide our stockholders with a high level of total return with an emphasis on dividends. The Fund attempts to do this by owning a strategic portfolio of assets in the energy infrastructure sector primarily pipeline and processing operations. The investments are in the form of limited partnerships interests in Master Limited Partnerships (MLPs). Energy infrastructure MLPs are engaged in the transportation storage and processing of hydrocarbon natural resources from production points to the end users. The Fund's investments are primarily in midstream pipeline and processing operations which produce steady streams of cash flows with less exposure to commodity prices than many alternative investments in the broader energy industry.

First Trust Energy Income & Growth Fund (FEN)
Inception Date: 6/24/2004
Total Net Assets: $211,787,000
Total Common Assets: $152,787,000

This is a leveraged closed-end mutual fund. The Fund's investment objective is to seek a high level of after-tax total return with an emphasis on current distributions paid to shareholders. The Fund seeks to provide its shareholders with an efficient vehicle to invest in a portfolio of cash-generating securities of energy companies. The Fund will focus on investing in publicly traded master limited partnerships ("MLPs") and related public entities in the energy sector which the Fund's sub-adviser believes offer opportunities for income and growth. Under normal market conditions after the invest-up period, the Fund will invest at least 85% of its managed assets (including assets obtained through leverage) in securities of energy companies and energy sector MLPs and MLP-related entities and will invest at least 65% of its managed assets in equity securities of such MLPs and MLP-related entities.


Kayne Anderson MLP Investment Company (KYN)
Inception Date: 9/27/2004
Total Net Assets: $1,391,720,000
Total Common Assets: $996,720,000

The Fund's investment objective is to obtain a high after-tax total return by investing at least 85% of our total assets in MLPs and other Midstream Energy Companies. MLPs refer to energy-related master limited partnerships and their affiliates.

Fiduciary/Claymore MLP Opportunity Fund (FMO)

Inception Date: 12/23/2004
Total Net Assets: $523,261,000
Total Common Assets: $373,261,000

This is a leveraged closed-end mutual fund. The Fund's investment objective is to provide a high level of after-tax total return with an emphasis on current distributions paid to shareholders. The Fund has been structured to seek to provide an efficient vehicle through which its shareholders may invest in a portfolio of publicly traded securities of master limited partnerships ("MLPs") and MLP Affiliates. The Fund anticipates that a substantial portion of the MLP entities in which the Fund invests will be engaged primarily in the energy natural resources and real estate sectors of the economy. The Fund may also invest in common stock of large capitalization companies including companies engaged primarily in such sectors.

BlackRock Global Energy & Resources Trust (BGR)
Inception Date: 12/29/2004
Total Net Assets: $945,655,000

This is a non-leveraged closed-end mutual fund. The Trust seeks to provide total return through a combination of current income and capital appreciation by investing primarily in equity securities of companies engaged in the energy and natural resources business and equity derivatives with exposure to the energy and natural resources industry. These equity securities may include common stocks preferred shares convertible securities warrants depository receipts equity interests in Canadian Royalty Trusts and MLPs. The Trust will not invest more than 25% of the value of its total assets in MLPs. The Trust expects to invest primarily in companies located in developed countries but may invest in companies located in emerging markets. The Trust may invest in companies of any size market-capitalization including small capitalization and mid-capitalization companies.

Tortoise Energy Capital Corporation (TYY)
Inception Date: 5/31/2005
Total Net Assets: $579,305,000
Total Common Assets: $389,305,000

This is a leveraged closed-end mutual fund. Its investment objective is to obtain a high level of total return with an emphasis on current distributions paid to stockholders. The Company will seek to provide its stockholders with an efficient vehicle to invest in a portfolio consisting primarily of MLPs and their affiliates in the energy infrastructure sector. Under normal circumstances and once fully invested in accordance with its investment objective the Company will have at least 80% of its net assets plus any borrowings for investment purposes invested in equity securities of entities in the energy sector and at least 80% of its total assets invested in equity securities of MLPs and their affiliates in the energy infrastructure sector.

Kayne Anderson Energy Total Return Fund (KYE)
Inception Date: 6/27/2005
Total Net Assets: $1,117,300,000
Total Common Assets: $817,300,000

This is a leveraged closed-end mutual fund. The Fund's investment objective is to obtain a high total return with an emphasis on current income. Under normal market conditions we will invest at least 80% of the aggregate of our net assets and borrowings (our "total assets") in securities of Energy Companies. We will invest in equity securities such as common stocks preferred stocks convertible securities warrants depository receipts and equity interests in MLPs MLP affiliates royalty trusts and other Energy Companies.

Tortoise North American Energy Corporation (TYN)
Inception Date: 10/31/2005
Total Net Assets: $157,333,000
Total Common Assets: $117,333,000

This is a leveraged closed-end mutual fund. The Company seeks to provide a high level of total return with an emphasis on tax-advantaged dividend income paid to shareholders by investing in a portfolio consisting primarily of publicly traded Canadian royalty trusts and royalty income trusts (collectively "RITs") and publicly traded United States master limited partnerships ("MLPs") with an emphasis on the midstream and downstream North American energy industry. Under normal conditions the Company will invest at least 80% of its total assets in equity securities of companies in the energy industry with their primary operations in North America ("Energy Companies"). The Company will invest at least 50% of its total assets in RITs will not invest more than 25% of its total assets in equity securities of MLPs and may invest up to 30% of its total assets in restricted securities.

Kayne Anderson Energy Development Company (KED)
Inception Date: 9/21/2006
Total Net Assets: $250,000,000

KED is a BDC (business development company) which invests in private (non-public) companies. Kayne Anderson Energy Development Company is a newly organized investment company incorporated under the laws of the State of Maryland to invest primarily in Energy Companies that are not traded publicly.

Its investment objective is to generate both current income and capital appreciation primarily through equity and debt investments. We seek to achieve this objective by investing at least 80% of our net assets together with the proceeds of any borrowings (our “total assets”) in securities of companies that derive the majority of their revenue from activities in the energy industry, including:

Midstream Energy Companies, which are businesses that operate assets used to gather, transport, process, treat, terminal and store natural gas, natural gas liquids, propane, crude oil or refined petroleum products;

Upstream Energy Companies, which are businesses engaged in the exploration, extraction and production of natural resources, including natural gas, natural gas liquids and crude oil, from onshore and offshore geological reservoirs; and

Other Energy Companies, which are businesses engaged in owning, leasing, managing, producing, processing and sale of coal and coal reserves; the marine transportation of crude oil, refined petroleum products, liquefied natural gas (“LNG”), as well as other energy-related natural resources using tank vessels and bulk carriers; and refining, marketing and distributing refined energy products, such as motor gasoline and propane to retail customers and industrial end-users. Midstream, Upstream and Other Energy Companies are collectively referred to herein as “Energy Companies.”

Its common stock is traded on the New York Stock Exchange under the symbol "KED." They are headquartered in Houston, Texas.

Commodity Funds

Commodities are becoming an increasingly popular investment vehicle recently. Major institutions are developing new mutual funds to satisfy the investment needs. The following commodity funds are the investment universe I can find from various sources for now. This is one of the newest asset classes to be added to sophisticated investment portfolios. The following mutual funds are listed according to their inception dates.

Central Fund of Canada (CEF)
Inception Date: 9/15/1983
Total Net Assets: $821,630,000

This is a closed-end mutual fund. Central Fund of Canada Limited is a closed-end investment management company. The primary objective of the fund is capital appreciation. The fund provides an alternative for investors interested in holding marketable gold and silver-related investments. The fund invests primarily in long-term holdings of gold and silver bullion and does not actively speculate on short-term changes in gold and silver prices. The stated investment policy of the Board of Directors requires Central Fund to maintain a minimum of 90% of its net assets in gold and silver bullion. At least 85% must be in the form of physical bullion holdings. The physical gold and silver bullion holdings are subject to insurance coverage against destruction, disappearance or wrongful abstraction. All expenses of handling, storage and insurance of bullion are paid by Central Fund. Unlike most other forms of bullion investment, there are no storage costs paid by the investor.

Oppenheimer Real Asset Class C (QRACX)
Inception Date: 3/31/1997
Total Net Assets: $1.9 billion

This is a mutual fund. The Fund is the first of its kind - providing retail investors with exposure to commodities. Through investments in securities whose value is linked to the commodity markets, investors receive full dollar-for-dollar exposure to this asset class. Commodities may help protect your portfolio against volatility in the financial markets. That's because tangible goods, such as agriculture or petroleum, are impacted by different factors than stocks or bonds, especially in difficult markets. Typically, when inflation rises, the cost of producing goods or the cost of borrowing funds increases. It may negatively impact stock or bond investments. Commodities, however, can benefit in this environment, as rising prices for raw materials (which are commodities) drive up performance.

The Fund invests primarily in derivative instruments that entail potentially higher volatility and risk of loss than traditional stock or bond investments. It may also invest in foreign securities, which may be more volatile and involve additional expenses and special risks, including currency exchanges, political and economic uncertainties and up to 10% in lower rated 'junk' bonds, which are more at risk of default. The Fund may hold a higher concentration of energy related natural resources, which may significantly influence results. Appropriate for investors seeking total return over the long term, plus the potential to enhance diversification of an existing mixed asset portfolio. Investing in securities may be volatile.

Pimco Commodity Real Return Strategy Fund Class D (PCRDX)
Inception Date: 11/29/2002
Total Net Assets: $1,530.20 M

This is a mutual fund. The investment seeks maximum real return consistent with prudent investment management. The fund normally invests in commodity-linked derivative instruments backed by a portfolio of inflation-indexed securities and other fixed income instruments. It may invest up to 10% of assets in high yield securities. The fund may also invest up to 30% of assets in securities denominated in foreign currencies. It is non-diversified.

streetTRACKS Gold Shares (GLD)
Inception Date: 11/18/2004
Total Net Assets: $7,333,423,000

This is an ETF. The investment objective of the Trust is for the shares to reflect the performance of the price of gold bullion less the expenses of the Trust's operations. The Shares are designed for investors who want a cost-effective and convenient way to invest in gold.

iShares COMEX Gold Trust (IAU)
Inception Date: 1/21/2005
Total Net Assets: $811,305,000

This is an ETF. The iShares COMEX Gold Trust seeks to correspond generally to the day-to-day movement of the price of gold bullion. The objective of the Trust is for the value to reflect at any given time the price of gold owned by the Trust at that time less the expenses and liabilities of the Trust.

Rydex Commodities Fund Class H (RYMBX)
Inception Date: 05/25/2005
Total Net Assets: $29.4 M

This is a no-load mutual fund. The investment seeks to provide investment results correlating to the performance of the GSCI index The fund seeks 100% (but at all times at least 80%) exposure to the performance of the commodities markets. The fund is non-diversified.

Powershares DB Commodity Index Tracking Fund (DBC)
Inception Date: 2/3/2006
Total Net Assets: $651.53 M

This is an ETF. DBC is an innovative product that offers investors unprecedented transparency and access to a commodity index. DBC's returns are expected to track the performance of the Deutsche Bank Liquid Commodity Index Excess Return (DBLCI). The DBLCI is a rules-based index based on six liquid futures contracts on Light Sweet Crude Oil, Heating Oil, Gold, Aluminum, Corn and Wheat.

Fidelity Strategic Real Return Fund (FSRRX)
Inception Date: 03/31/2006
Total Net Assets: $2,529.74 M

This is a no-load mutual fund. Allocates the fund's assets among four general investment categories: inflation-protected debt securities, floating-rate loans, commodity-linked notes and related investments, and real estate investment trusts (REITS) and other real estate related investments. The fund uses a neutral mix of approximately 30% inflation-protected debt securities; 25% floating-rate loans, 25% commodity-linked notes and related investments, and 20% REITs and other real estate related investments. The fund invests in domestic and foreign issuers. The fund manager analyzes a security's structural features and current pricing, its issuer's potential for success and the credit, currency, and economic risks of the security and its issuer to select investments.

United States Oil Fund (USO)
Inception Date: 4/10/2006
Total Net Assets: $0.42 Billion

This is an ETF. The investment seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The fund will invest in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges. It may also invest in other oil interests such as cash-settled options on oil futures contracts, forward contracts for oil, and OTC transactions that are based on the price of oil. The fund is non-diversified.

iShares Silver Trust (SLV)
Inception Date: 4/21/2006
Total Net Assets: $1,105,326,396

The objective of the trust is for the value of the iShares to reflect at any given time the price of silver owned by the trust at that time less the trust's expenses and liabilities. The trust receives silver deposited with it in exchange for the creation of Baskets of iShares sells silver as necessary to cover the trust expenses and other liabilities and delivers silver in exchange for Baskets of iShares surrendered to it for redemption. The iShares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in silver.

iShares GSCI Commodity-Indexed Trust (GSG)
Inception Date: 7/21/2006
Total Net Assets: $46,398,615

This is an ETF. The investment objective of the Fund is to seek investment results, through the Trusts investment in the commodity pool iShares, Goldman Sachs Commodity-Indexed Investing Pool LLC or the Investing Pool, that correspond generally, but are not necessarily identical, to the performance of the Index, before the payment of expenses and liabilities of the Trust and the Investing Pool. The Investing Pool will hold long positions in futures contracts on the Goldman Sachs Commodity Index Excess Return Index, called CERFs, which are futures contracts listed on the Chicago Mercantile Exchange that have a term of approximately five years after listing and whose settlement at expiration is based on the value of the Goldman Sachs Commodity Index Excess Return Index.

The Gotrocks Fund

Today Zhao Zhen and I met again talking about Covavest. Now we have determined to pursue a focus approach to the investment web site. We will focus on the risk-adjusted investment strategy as the general guidance to Covavest. Three divisions of work should be concentrated over the next few months.

Local marketing will be concentrated on the local general investors such as the local Chinese communities, local associations, and local media. Special presentation materials should be developed to address the needs of the general investors. The goal is to educate the risk-adjusted investment methodology to the general investors.

The Internet media will be concentrated around using the new web technologies. Several successful stories like Wikipedia, Flicker, Delicious, & Digg should be our examples in this effort. The functionalities of these web sites should be utilized to have a rich user experience.

Got Rocks Mutual fund is our third concentration. Since we have to start from somewhere anyway, we should start our least resistance first. Currently we think the local marketing efforts and the Internet marketing should our paramount tasks for us now.

History of Risk-Adjusted Investments

We reviewed the risk-adjusted investment history. The first idea is the total return mutual funds. Sometimes they are called balanced funds or hybrid funds. These funds usually invest in stocks and bonds with relatively flexible investment strategies. They can adjust the relative weights of stocks and bonds. There are several total return closed-end funds. Three examples are listed below for references.

Zweig Total Return fund seeks high total return over full-market cycles by investing primarily in high quality bonds and to a lesser degree stocks. The fund will normally invest between 50% and 65% of its total assets in the highest quality fixed-income securities and between 25% and 35% in equity securities. Our objective is to participate solidly in rising stock and bond markets and protect the bulk of those gains in declining markets.

Boulder Total Return Fund seeks to produce both long-term capital appreciation through investment in common stocks and high current income consistent with preservation of capital through investments in income producing securities. For long-term capital appreciation the Company typically will invest in U.S. companies that have a proven track record of earnings and the prospect of increased future value through growth in revenues and profits. It anticipates a low turnover rate in its portfolio. Because the Fund is leveraged the Company invests in income producing securities such as REITs and other registered closed-end income funds "RICS" such as bond funds as well as other income producing securities.

Another example is the Vanguard Asset Allocation Fund. This fund allocates its assets among stocks, bonds, and money market instruments in proportions consistent with the fund advisor’s evaluation of their expected returns and risks. The proportions are changed from time to time as return expectations shift. The fund may invest up to 100% of its assets in any one of these three asset classes.

The second examples of the risk-adjusted return funds are the lifestyle mutual funds. These mutual funds are usually divided from most aggressive ones to very conservative ones. Vanguard has four life-strategy funds ranging from growth fund, to moderate growth fund, to conservative growth fund, and income funds. Fidelity calls this type of funds as Asset Manager Funds. These funds usually fixed ratios among stocks and bonds.
The most recent development in the risk-adjusted funds is the lifecycle funds. Vanguard names these funds as target retirement funds. Each fund has different target retirement date. These dates are usually in five years intervals. Vanguard has funds ranging from 2005 to 2050 with five year intervals between them. Fidelity names these funds as Freedom Funds ranging from 2000 to 2050 with five year intervals between them.

Gotrocks Fund

There are two problems with the above mentioned risk-adjusted funds. In one side they include only limited classes of assets, usually stocks and bonds only. Another problem is that they have too many combinations for different investors. We believe that all investors should have the same optimal allocations among many asset classes. We call this kind of fund as the Gotrocks Fund.

In order to put this idea in practice, we have decided to do the following tasks first.

We need to establish a company. Zhao Zhen is going to find some documents related to starting a company.

We need a name for the company. We both need to think of great names for our company. Zhao Zhen believes that the company name and the web site need can be different.

Zhao Zhen will start research the web server technologies needed to develop a web site. I will start put together the basic investment methodology about the Gotrocks Fund.

Economics of International Trade

Today the Global Economy class discussed about the economics of international trade. Main topics include opportunity cost, indifference curve (utility stays the same), production efficient frontier (production possibility frontier), and Ricardo’s economic model of international trade.

Opportunity cost is the cost of something in terms of an opportunity forgone, or the most valuable forgone alternative. In other words, the opportunity cost is the cost of the second best choice. For example, I was taking the class yesterday afternoon. What is the opportunity cost for me? I could have spent the class time reading a book about economics of international trade.

Indifference curve is a graph showing different combinations of two goods (e.g. shoes and computers used in the class) for which the consumer can derive the same level of satisfaction (same amount of utility). The indifference curves are convex curves. The convexity shows the diminishing rate of margin for substitution.

Production possibility frontier or production possibility boundary is a curve showing the tradeoff between producing two products (e.g. shoes and computers). It indicates the opportunity cost to produce one unit of product in terms of one unit of a forgone product. This curve is usually concave.

Putting the above two curves together with one tangent to another, one can determine the optimal consumption and production point. Usually, the real world is not operated at the optimal point.

The class discussed about David Ricardo’s economic model of international trade. Basically the model shows that international trade based on comparative advantage is beneficial to both sides of the trade.

Four stages of Economic Development

This semester I am auditing Global Economy at the UT Dallas. The teacher is a brand-new professor. By the third class, she said her computer was not fully set up. She could not print anything yet. Olina came for the first two classes. She decided that she would not take this class any more since she could not stand the teacher.

I felt that the third class was becoming more interesting. In this class, the brief history of globalization was introduced. In old Europe, the society was divided among the kings, nobles, and peasants. The nobles traded among themselves. They used marriage to solidify their relationships. Later the merchants came along to trade luxury goods bought from far away places. Later, the mercantilism took over the society started by financing wars to secure trades and materials supplies. Colonies were established by the European power over other parts of the world. Countries like India, many southeast countries, Africa, America were become colonies. The mercantilism has developed to the multinational corporations in this new globalization process.

The class spent quite long time to list the pros and cons of the multinational corporation. Most of the discussions about the pros and cons were very basic. However the discussion about China was furious. Many believed that China would wage wars in order to secure natural resources. Some believed that China would pursue peaceful developments. My assessment is that most of the students have very limited understanding of China. Most of the negative comments about China were emotional ones.

The class also discussed about the four stages of economic development – factor driven, investment driven, innovation driven, and wealth driven.

In the factor driven stage, one of the four factors of economic production – land, capital, labor, and entrepreneurship is the main drive for new economic activities. Many developing countries are still in this stage.

In the investment driven stage, there are many opportunities for economic developments. It’s like gold is everywhere. If you can invest some capital, money can be made. The Internet development in the 1990s was like this stage.

In the innovation sage, basic investments were in place already. In the United States, heavy investments in software and computer technologies were placed in the years between 1995 and 2000. Since the investments were too heavy, economic slowdowns were followed in the next two years. Now innovation driven economic development is in place to digest the early investments. South Korea is more or less in the innovation-driven stage.

In the wealth driven stage, the main economic activities are concentrated around the wealth creation. Mergers and acquisitions are the main way to recombine the means of production. Huge wealth is created or destroyed in this process. Recently many well-run corporations have been taken private. One of the premier pipeline company Kinder Morgan is bought by private equity with about $17 billion.

Different countries were in different stage of economic developments. Multinational corporations have to cope with these differences in order to fully utilize the economic potential power of each country. Most current multinational corporations are headquartered in advanced countries such as the United Sates, Western Europe, and Japan. Increasingly, companies organized in Korea, Taiwan, and other emerging economies are coming to the multinational corporation status.

After class, I met Olina and Richard at Starbucks near 75 & Campbell. We discussed further about this subject. Richard said he had accepted a new challenging project in Texas Instruments to develop an advanced microchip in wireless communications. His work is to develop a wonderful device to balance the quality and speed in communications at the same time. Some college has aired their opinions about this project. HP today has such a system which costs $40,000 to produce. However, Richard has to design such a chip costs in the hundreds or tens dollars.